Claim expenses – as a limited company

This is not an exhaustive list, because of the unique tax situation of each company, but guidance on the kind of the expenses that can be claimed.

If you have any queries, ask your accountant before making the purchase!

The overriding principle is that the expense should be WHOLLY AND EXCLUSIVELY for the purpose of your business.

If an expense is used for both business and personal – for example, a personal mobile phone – you can calculate a percentage for the business claim, or claim specific costs incurred for business.

All items must be supported by documentary evidence. It is the directors’ responsibility to ensure all expenses are valid and correct. An expense is accounted for when it’s (i) bought and/or (ii) brought into use by the company.

These are called “cost of sales” and are related specifically to your product/service:

Purchase of materials to make your product.

Selling and transport costs, distributing the product.

These are called “overheads” and are related to the overall running of your business:

Salaries

Executive pension contributions (via an approved scheme).

Employers’ national insurance contributions (NICs) payable on salaries paid to company employees.

The cost of subsistence while away from your workplace (no claims after 24 months for subsistence at the same ‘temporary workplace’).

Accommodation costs when away from normal place of business (although must not exceed 24 months at a ‘temporary workplace’).

Travel and parking costs, mileage allowance if using own vehicle of 45p/mile for the first 10,000 miles, and 25p/mile thereafter. 20p/mile rate for bicycles.

Training course fees as long as the skills are relevant to the business.

Stationery, postage, and printing costs.

Business insurance, such as a professional indemnity insurance.

Company formation and ongoing costs (e.g.Annual Return fee), although the company formation fee is a ‘capital cost’, and cannot be set off against Corporation Tax.

Telephone and broadband packages (if the contract is in the company name).

Mobile and Smartphones(if the contract is in the company name).

The cost of business calls can be reclaimed on a residential phone bill.

Home office costs(a flat £4/week without receipts is allowed by HMRC, or work out a proportion of the household bills).

Computer equipment and software.

Costs of advertising and marketing your business.

Business gifts up to £50 per individual are allowable before more complex rules apply.

Incidental overnight expenses of £5/night (£10/night if overseas) can be claimed as a flat rate if you are working away from home.

Authorised bank charges, e.g. standing charges each quarter.

Christmas party exemption for directors and employees of £150 per person per year (you can include your partner or spouse).

Professional fees, such as accountant or solicitor.

A limited number of professional subscriptions, if allowed by HMRC.

Capital allowances(depreciation of assets).

Business magazines and books.

An eye test for employees who use computer equipment.

An annual private health check for employees.

Hire purchase agreements (in the company name).

Company car expenses, if the car is in the company name(the employee will incur benefit in kind charge for private use).